Wednesday, August 26, 2020 / by Teresa DiPeso
Let’s face it, it doesn’t seem like COVID-19 is having an adverse effect on many markets across the country. A least not yet. In fact, just the opposite. Insanely low interest rates coupled with more companies adopting a work-from-home culture has buyers and sellers considering their options and reevaluating their living situation.
Here at the Shore, we have some the lowest inventory levels in decades. Low inventory combined with high demand has buyers feeling the anxiety of an extremely competitive market.
Having to compete in a multiple-offer situation on nearly every offer has forced me to come up with every possible way to make my buyer’s offer the most attractive to the seller. Of course, all of these options are predicated upon the comfort level of my client. One or all of these options could be appropriate, depending upon the situation.
1. Employ an escalation clause
I start by running comps. The offer will likely need to be over the list price. That being the case, how much over the list price do the comps support?
Additionally, how much do I feel we’ll need to offer given the condition and location of the home? Once I determine a “cap” for the offer, I suggest an escalation clause up to the cap amount.
2. Cover the appraisal gap
Next, appraisal gap coverage is another seller-pleaser. Appraisal gap coverage is stating in the offer that the buyer will cover any shortage between the offer price and the appraised value.
It’s always a good idea to cap this amount as well. Any shortage amount will increase the down payment for your buyer. You will want consult your clients on the amount they’re willing and able to afford.
3. Make inspections easier
The inspection is another area to set the seller at ease. Here are a few ways to make your offer more attractive:
-Offer to take the property “as is.” Make sure you don’t forfeit the right to an inspection, and always include the option to terminate. The idea is to communicate that your buyer is comfortable with the condition of the home and won’t ask for any repairs. However, if you complete the inspection and there are too may red flags, you retain the right to terminate without penalty.
-Offer to limit your inspection repair requests to heath- and safety-related items only.
-Offer to limit your inspection repair requests to those items exceeding a predetermined amount. For example, $500 or $1,000 depending upon the situation and your clients comfort level.
4. Offer a post-close occupancy agreement
A post-close occupancy agreement or free rent back is another strategy to cater to the sellers. Make sure to ask the listing agent about the sellers’ plans. Have they found a replacement home? If not, offering the ability for the sellers to remain in the home post-close with free rent can be advantageous.
5. Waive the loan termination provision
Another great idea, one that takes some preplanning, especially if you are competing against cash, is to get your client pre-approved. Ask the lender if they are comfortable waiving the loan termination provision of the contract.
Make sure the lender understands that in the event they can’t deliver, they are willing to reimburse the earnest money. Get it in writing.
6. Consider the tried-and-trues
Offering hard earnest money, a quicker close, shorter deadlines and having great communication can all help you win a multiple-offer situation.
Be sure to stay away from buyer love letters. They are fraught with potential fair housing violations.
At the end of the day, my job as a real estate agent is to have numerous options to help my clients succeed with their plans. Call, text or email today to put my 25 years experience to work for you.